From the article:
“The rise of the pharmacy benefit manager, which is an entity that negotiates rebates with pharmaceutical companies, taking a proportion of the drug cost as profit without any sort of price transparency.”
This is the primary upward force in the list price of drugs. Nobody pays the list price, unless they don’t have insurance or are paying out of deductible. They are for practical purposes fake numbers. The vast vast majority of insulin purchased in this country actually receives a massive rebate to the patients insurance after the list price is paid. These rebates are where the negotiation and competition exists, and to the pharma company willing to offer the biggest rebate goes the contract award—- this has the very obvious effect of driving the prices upward indefinitely. Think about it. If I’m selling a car for $10,000, but now I have to collect the money with my right hand and hand back a $5,000 rebate with my left hand, the new price of the car becomes $15,000. If 30 different people are negotiating that rebate up and up indefinitely but the value of the product remains the same, what do we expect to happen to the “price” ?
The other issue is that we as consumers, due to the insurance market, don’t respond to supply and demand. NPH and R are available at Walmart for $25 but how many of us buy and use it? Hardly any… even if we accept that it’s not as good, shouldn’t more and more people use it as the price of other insulins continue to rise? To not would defy economics, which is exactly what we see happening.